Moore went to First National Bank and requested that the president of the bank allow his adult sons, Rocky and Mike, to open an account in the name of Texas Continental Express, Inc. Moore promised to bring his own business to the bank and orally agreed to make good any losses that the bank might incur from receiving dishonored checks from Texas Continental. The bank then furnished a regular checking account and bank draft services to Texas Continental. Several years later, Texas Continental wrote checks that were returned for insufficient funds. The amounts of those checks totaled $448,942.05. Texas Continental did not cover the checks and the bank turned to Moore for payment.

1. Was Moore's oral promise to pay Texas Continental's dishonored checks enforceable?
2. If not, what would have been required in the nature of writing to make the promise enforceable?
3. Suppose there had been a written agreement between Moore and the bank. Would the bank have been able to enforce an oral promise made by Moore that was not stated in the written contract?
4. Would it be ethical of Moore not to pay the bank?

Answer to Q1:
According to The Statue of Frauds contracts such as "Contracts to be responsible for someone else's debt" should be clearly written agreements and signed by both parties involved. Clear written contracts should be in place when a person decides to be a guarantor for someone and pay his debt partially / fully.

Hence, in this case, Moore's verbal promise to pay the dishonored checks cannot be enforced in the court.

Answer to Q2:

In order to make this verbal contract enforceable, the bank should have got the following in writing from Mr. Moore:

1. He is a guarantor for any losses incurred by Texas Continental Express, Inc.

2. Mr. Moore would have to pay the amount of returned checks in X number of months / years.

Answer to Q3:

Although, it is an extremely difficult task to prove the existence of a verbal contract.The bank can enforce it with Mr. Moore if it involved the 3 elements of an oral contract.

For example, the bank can enforce Moore's promise to bring his original business to the bank. The 3 elements of an oral agreement are present in this case:

1. A specific offer - Moore promised to bring his own business to the bank

2. Acceptance of the terms of the offer

3. Consideration - The bank did furnish a regular checking account and bank draft services to Texas Continental Express Inc. thinking Moore would bring his original business to the bank

Answer to Q4:

It is never ethical to cheat or mislead someone. Mr. Moore's act of not paying the bank is not only un-ethical but also harmful for his business. His reputation among other banks is also spoiled which would make it tough for him in future financial transactions.